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Hypercompetition - Essay Example

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Creating and protecting a market position is beneficial if the competition is sparse, or the firm has a unique product that gives them supplier power. However, if a profit is being made on the product, it will attract competitors and innovators will find substitute products (Sull & Escobari 2004 p.15). It may take substantial resources through advertising and customer service to maintain a position in a fluid market (Day & Reibstein 1997 p.52). It may be easier to create a new opportunity than it is to protect an old position. However, new opportunities require resources.
Amassing resources can be a definite advantage. However, the value of these resources may erode if other firms can easily acquire them (Day & Reibstein 1997 p.312). A firm needs to evaluate all its resources. Garelli (2006) states, "Competitiveness thrives increasingly on intangible assets that are difficult to value, to account for, to create, and to recover" (p.4). Firms can maximise their competitive edge by utilising their intangible assets as well as they can any other raw material. These resources may be easier to protect than a superior market position. However, in today's hypercompetitive market competitors are quick to take your intangibles such as innovations, employees, and market share.
The signs of hyercompetition are everywhere. In fact, competition has evolved from dirty tricks into criminal behaviour. Global firms such as Proctor and Gamble, Oracle, and Deloitte & Touche have been caught up in scandal in their underhanded attempts to undermine the competition (Grimm 2005 p.7). Competition in the US wireless market has left an industry in paralysis and the world of global products has produced an air of uncertainty (Sull & Escobari 2004 p.17, Woolley 2003). Still, most firms have learned to compete by integrating new strategies to supplement the tried and true theories on creating value.
The restructuring of the global economy has demanded that firms not only take every opportunity, but they must create opportunity as well. The goal is, as D'Aveni says, "to upset the equilibrium of the industry, disrupt the status quo, and open opportunities for a new advantage" (1995a p.53). How does a firm reshuffle the product, the market, and the consumer to turn the situation into a competitive advantage To do so it is imperative that the firm understands the nature of hypercompetition.
Hypercompetition is a concentrated effort by competitors to create and sustain market instability and to establish an uncertainty of economic conditions (Mittleman 2000 p. 16). By definition it is a rapidly changing environment where there is no long-term sustainability. Firms need to plan for short-term strategies. In D'Aveni's 7S's, he points out two necessary dynamics that a firm will need in a hypercompetitive marketplace; speed and surprise. (1995a p.51). A prolonged strategy of surprise will keep the competitors off balance and the firm will benefit from gaining momentum.
Speed can be a valuable asset when getting a new innovation to market. With today's short product life span, the first to enter the market stands to gain. However, with shorter development time costs are driven up, quality suffers, and profits begin to wane (Gibson 1997 p.51). Speed to market may be a short-term necessity, but may not give the ...Show more


Perfect competition and sustainable profits may have gone the way of the horse drawn carriage. A reduction in barriers, new technology, and innovation has brought about fierce fighting for a select market share. It now requires a "continual, radical innovation" to maintain a competitive advantage (New rules 2002)…
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Hypercompetition essay example
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